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London Court Rules for Havila in Sanction Dispute with GTLK

Havila Norwegian cruise ships
Havila won a court decision so that it can free its cruise ships from the Russian snactions (Havila)

Published Dec 15, 2022 8:09 PM by The Maritime Executive

Norwegian ship owner Havila Kystruten received a significant court ruling in its nearly eight-month-long battle to extradite its coastal cruise ships from the financial sanctions imposed against Russian financial institutions after the attack on Ukraine. Havila found itself caught by the European actions because they had financing deals with divisions GTLK, a Russian financial company well-known for ship financing.

The High Court of Justice, Business and Property Courts of England and Wales, Commercial Court (QBD) in London ruled on December 8 in favor of Havila clearing the way for the company to take ownership of the vessels. The court had previously protected Havila's rights for two ships under construction and now it agreed with Havila that the debt Havila Voyages has to GTLK in connection with the construction financing and the planned leasing financing of completed ships will be released by settlement. The settlement of debt to GTLK will be completed by payment to a frozen account in accordance with the sanctioning regulations.

“This is a good clarification for us, and states that we have the full right to take over Havila Polaris and eventually Havila Pollux, at the same time that we get to settle Havila Capella,” said managing director Bent Martini. “We have been through a demanding period with a lot of uncertainty which has affected progress on the delivery of Havila Polaris, but we are happy that a decision has now been made.”

Havila had entered into a construction financing and charter agreement with GTLK Europe and GTLK Asia for the construction of the four 15,500 gross ton cruise ships to start the company’s new service between Bergen and Kirkenes, Norway. The first of the four ships, Havila Capella was delivered and began the long-term charter operated by Havila in December 2021. The three other cruise ships were due to be delivered in 2022.

After the sanctions were imposed Havila encountered uncertainty over the insurance for its vessel. The company pointed out that was registered in Norway and operated under Norwegian regulations, but the official owners remained GTLK. The Norwegian government ultimately agreed with the company giving it a waiver to operate but the insurance companies withdraw the general liability policy saying if there was a claim the award would go to the owners, GTLK. 

Havila proposed buying the Havila Capella but the company reported it was prohibited from completing the transaction because it would have been sending the money to a sanctioned institution. They proposed placing the money in an escrow account but GTLK reportedly refused. The Havila Capella remained out of service from mid-April until the company received the necessary certificates from the Norwegian Maritime Directorate to resume sailing on June 28.

Unable to resolve the ownership issues, Havila Kystruten in June filed a case with the London court to force a change of ownership of the ship and to protect its interests in the two cruise ships under construction in Turkey. The second cruise ship, Havila Castor, was delivered to the cruise line in May after the shipyard assisted with a bridge loan.

Havila Voyages reports it had postponed the delivery of Havila Polaris from the Tersan shipyard pending the hearing in London and the court order. The company is now planning to take delivery in the coming days and immediately commence a voyage to Norway. The Havila Polaris is due to sail on its maiden voyage along the Norwegian coast from Bergen on December 29. 

Despite the holiday season, the company will attempt to complete the commissioning work in Norway to maintain the scheduled voyage. They noted that they were able thanks to a unique effort by their crew to commission the Havila Castor with just five days in Bergen. The fourth cruise ship is still under construction in Turkey but the company expects to take delivery in 2023.

The four cruise ships are among the most advanced ship in operation. They are fueled by LNG and also are outfitted with the world's largest battery pack. The battery permits the ships to sail for up to four hours. In June, they completed the first voyage in the Norwegian fjords using solely battery power. Each of the cruise ships is 407 feet long with accommodations for 640 passengers. The voyages are offered as cruises or transportation along the Norwegian coast.